By Tiernan Ray

Evercore Partners’s Rob Cihra today reiterates an Overweight rating on shares of Apple (AAPL) while cutting his price target to $750 from $775, after trimming his estimates for this fiscal year ending in September for the company’s Mac computer and iPad units, and cutting his estimate for iPhone units, writing that speculation last month about production cuts for the iPhone 5 for the March quarter suggest “some degree of early demand tailing off,” as a growing proportion of the demand for the device is coming from replacement sales versus new buyers.

Apple shares today are down $2.59, or half a percent, at $546.43.

Cihra actually raised his iPhone estimate for the fiscal Q1 ended last month to 50 million units from a prior 49-million estimate, reflecting “strong demand,” in his view. For March, he cut his unit number to 39 million units from 44.7 million previously. For the full fiscal year, Cihra goes to 152.96 million units from a prior 163.89 million units.

Cihra does a back-of-the-envelope on what the rising installed base and replacement cycles look like for the iPhone:

Now 5 ½ years since Apple launched its first iPhone in 2H-07, by definition a growing proportion of iPhone demand is driven by replacement sales vs. incremental new users. Specifically, using a simple 2yr replacement cycle, we estimate Apple exiting CY12 with a global iPhone installed base of 231mil users, up +64%Y/Y. Out of its total FY12 sell-through of 122mil iPhones, we estimate 32% coming from replacements/upgrades vs. 68% from new users (w/ new user sales growing +67%Y/Y). But looking into FY13, we estimate replacement sales increasing to 49% of the mix of a total 143mil iPhone sell-through, and new user additions actually tailing off -11%Y/Y at 74mil vs. 83mil in FY12. We think this dynamic is driving the growing expectations for a lower-cost iPhone in hopes of broadened Apple’s addressable market, but to date we believe the company’s intentions are to keep addressing that lower end through older-gen models.

Cihra does see mitigating factors for Apple as it expands distribution of the iPhone. For example, although he pushes back the time frame for a deal with China Mobile (CHL) to the latter half of this year from what he thought we be the first half, he thinks that China Mobile is inclined to want to get the iPhone because it may be eating away at China Mobile’s business:

Driving competitive dynamics, we think China Mobile could be starting to “need” the iPhone more, since it has seen its 3G market share erode by -7% to 37% since 2011 vs. China Telecom+Unicom having gained +7% to 63%. China Unicom alone has added nearly 2mil more 3G subs than China Mobile YTD (30mil vs. 28mil) despite being almost 1/3 the size and overall share losses look to correlate with introduction of the iPhone in Mainland China. With an estimate that iPhone could achieve 20% penetration of China Mobile’s 3G/4G subs, we see it offering a >16mil iPhone opportunity its first full year.

Cihra also sees a greater role for the iPad mini in Apple’s results. Out of the 24 million iPads he thinks Apple sold last quarter, 10 million may have been minis, higher than the 8 million he previously modeled. In the March quarter, minis may make up 60% of 19.2 million units he thinks the company will sell.

Cihra writes that the mini “is clearly cannibalizing the larger iPad,” and will come to represent 50% of iPad shipments over time, as “there is clearly market demand for lower-priced Apple products.”

Cihra expects the iPad will hold onto dominant tablet market share:

Even with competitive iPad wannabes ramping like mad, from Samsung [Electronics's (005930KS)] traditional #2 Galaxy Tab to Microsoft’s (MSFT) new PC-like Surface, together with tablets from Google (GOOG)/Nexus and Amazon (AMZN)/Kindle Fire priced only around cost in hopes of driving after-sales revs, we nevertheless still see Apple’s iPad accounting for >50% of all tablet market share this CQ4, in CY12 and in CY13E.

Cihra’s full-year 2013 estimate goes to $182.39 billion in revenue and $47.06 per share in EPS, down from a prior projection of $192.82 billion and $50.33 per share.

Cihra’s $750 target represents a 12.5 times multiple on calendar 2013 results, after backing out cash, or “11.5x EV/FCF, which we consider wholly conservative relative to our forecast Apple keeps growing both revs and EPS organically at a multiple of peers.”

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